Financial inclusion has to move beyond channelising benefits and centre around the everyday concerns of people. One of the biggest financial inclusion reforms is currently under way in India. Thanks to the JAM Trinity of Jan Dhan Yojana, Aadhar, and Mobile phone ownership, India is gearing to roll out direct transfer of benefits for various programmes.

However, financial inclusion is meaningful when the poor are able to use formal financial services such as bank accounts, loans and insurance to increase incomes and improve their lives. Cash benefits transfer from the government can only be a short-term end. For the larger objective to become a reality, quality financial services must be provided to the underprivilality, and low-income customers must see clear benefits of using these services.

Behavioural barrier

Recent reports highlight two types of quality related issues around implementation of the Jan Dhan programme. The National Stock Exchange-Institute of Financial Management and Research (NSE-IFMR) working paper Barriers to Basic Banking: Results from an Audit Study in South India points out that despite a clear brief to provide basic bank accounts to customers, banks tend to discourage it. The study team, acting as customers , was turned away when they tried to negotiate for a basic bank account.

The other issue pertains to the “unrealistic” expectations of the new account-holders. A new bank account holder was heard planning to buy a new auto rickshaw with the money he expects to receive in his bank account!

These could be only anecdotes. But the “quality” of our financial inclusion is suspect, reflected in high ‘dormancy’, or unused accounts.

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